The Youngstown Foundation

Youngstown Foundation VS. Private Foundations

The costs of establishing and running a private foundation can be overwhelming. Traditionally, assets in excess of $5 million are needed before the private foundation becomes a cost effective alternative.

As a community foundation, The Youngstown Foundation provides donors with all the functionality of a private foundation, but with significant economic and administrative advantages.

The advantages of working with The Youngstown Foundation are:

 


Establishing the Fund

The Youngstown Foundation


The individual fund is established with a single signed document and contribution.

Private Foundation


Nonprofit corporation or trust must be established; board of trustees appointed; typically requires $1M or more.

IRS Charitable Status

Automatically covered under The Youngstown Foundation's charity tax exempt status.

Must apply to IRS for private foundation tax exempt status which can take 6 months or longer to be processed.

Start-up Costs

No "start-up" fees

Similar to Corporate start-up requiring substantial legal, accounting and operational start-up costs.

Excise Taxes

None

1.39% of net investment income

Tax Treatment: Cash Gifts

Deductible up to 60% of adjusted gross income.

Deductible up to 30% adjusted gross income.

Tax Treatment: Appreciated Publicly-Traded Stock, Held > 1 Year

Full market value deductible up to 30% of adjusted gross income.

Full market value deductible up to 20% of adjusted gross income.

Tax Treatment: Closely Held Stock or Real Estate

Full market value deductible up to 30% of adjusted gross income.

Deduction limited to cost basis; up to 20% of adjusted gross income.

Annual Distribution Requirements

None

Required to make annual charitable distributions of at least 5% of asset value. Penalty ta is 30% of undistributed amount.

Grantmaking

Donor recommends grants to qualified nonprofit organizations.

Trustees control grantmaking subject to IRS requirements.

Grantmaking Expertise

Automatic access to Foundation's team of experts to help identify and assess grantees. Extensive research, tools and tips on effective grantmaking and other resources available.

Trustees must arrange, administer and support grantmaking and monitoring structure.

Annual Tax Returns and Audit

The Youngstown Foundation files annual tax returns and provides an annual independent audit.

Trustees must handle.

Investments

The Youngstown Foundation assets are pooled into a larger portfolio enabling it to diversity investment, decrease management fees and ensure superior returns.

Trustees are completely responsible for all investment related activities.

Fiduciary Responsibility

The Youngstown Foundation fulfills all responsibilities.

The private foundation board has full fiduciary responsibility.

Administrative Concerns

All administration services provided by Foundation.

Generally requires personnel for operations, tax filings, and investment management.

Privacy vs Publicity

Donors, their funds and grant awards can remain anonymous or they can be promoted through the Youngstown Foundation's marketing/public relations network.

Detailed tax returns are filed with data on grants issued, investment fees, trustee fees, staff salaries, etc. These returns are public records and can be compiled into grant-seeker directories.

 

FriendsHelp for Private Foundations
It is easy to become overwhelmed with responsibilities of grantmaking, legal and administrative requirements, and fiduciary work when you have a Private Foundation. Take advantage of the benefits of working through The Youngstown Foundation and alleviate these challenges.
  • Contributions to The Youngstown Foundation:
    Private Foundation Trustees often have difficulty deciding on a sufficient number of grants in order to meet the annual 5% payout requirement.

    Contributions from a Private Foundation to The Youngstown Foundation are qualifying contributions that satisfy their minimum distribution requirements.

    Grants from Private Foundations to Community Foundations are not “taxable” expenditures and not subject to expenditure responsibility requirements. Therefore, a Private Foundation may establish a Donor Advised Fund and meet its distribution requirements while enjoying the advantages of being a part of The Youngstown Foundation.


Private Foundations Challenges:
Over time, Private Foundations develop the following concerns:
  • The original purpose of the foundation no longer has the urgency it once did.
  • As operating costs increase and government regulations multiply, financial factors make it difficult for the foundation to operate effectively.
  • The foundation’s board has lost members through resignation and death, and has found it difficult to attract new members.
  • Future generations will not continue to fulfill the founder’s charitable interests.
  • The founder desires that his/her children focus on the family’s philanthropy, not on the Foundation’s investments and administration.
  • Requirements and responsibilities of a Private Foundation become too time consuming.

Transfer Private Foundation Assets to The Youngstown Foundation:
  • Follow The Youngstown Foundation’s simple process to establish a Donor Advised Fund with the same distribution criteria as the Private Foundation.
  • Work with The Youngstown Foundation to appoint an advisory committee that will carry out the grant review processes, previously carried out by the Board of the Private Foundation.
  • Transfer the assets of the Private Foundation to the Donor Advised Fund. Once assets are transferred the fund becomes active and grants can be awarded.
  • At the end of the fiscal year of the Private Foundation, submit a final 990 to the IRS, informing them that the Private Foundation has ceased operation with zero assets.

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